US data back to the forefront - BNPP

Research Team at BNP Paribas, suggests that following yesterday’s soft US data their economists expect a more positive message on Thursday with the durable goods orders seen reversing some of their recent weakness with a rebound of 1.2% m/m and weekly jobless claims holding at levels that are consistent with a healthy labor markets.

Key Quotes

“Taking stock of recent Fed communications, the hawks (George, Lacker) have hinted their outlook had not changed significantly and the Fed should continue normalizing policy, while others (Fischer, Kaplan) have taken a more wait-and-see approach. Bullard reiterated overnight that rates should not be raised while inflation expectations are declining. The Fed speaker circuit remains busy today with Lockhart (13:10GMT) and Williams (17:00GMT).

As we move into the end of the week expect the focus to shift to the upcoming G20 finance ministers and central banker meetings in Shanghai. Markets are hoping for a reassuring message although we suspect that the G20 will stop short of an outright coordinated policy response, particularly in the FX space.

We remain sceptical of a sustained USD recovery vs. the EUR and JPY in the absence of a financial market backdrop that will significantly revive Fed tightening expectations.”
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